Gold Has Best-Ever Close

Gold prices broke records again Monday on the back of bad news from the housing market.

Benchmark bullion contracts added $16.60 to close at $932.80 an ounce in frenetic action on the Comex division of the New York Mercantile Exchange, marking the highest settlement price ever for the metal.

The exchange-traded funds that hold inventories of the metal were rising also, with the iShares Comex Gold Trust ( IAU) and streetTracks Gold Shares ( GLD) both ahead by about 1.5%.

Gold was already higher during the morning but it received an added boost as the Commerce Department said monthly sales of new homes dropped much more than expected.

Traders interpreted the news to mean that the Federal Reserve would cut short-term interest rates by half a percentage point rather than a quarter point in an effort to buoy the economy. That translated into a surge in gold prices, which tend to do well in times of economic uncertainty.

In general, the strong showing in metal prices gave a boost to the miners, with Yamana Gold ( AUY) ahead by almost 5%, and Golden Star Resources ( GSS) up 4%.

Shares of the major South African firms were suffering due to concerns about ongoing production problems associated with last week's power outage. Harmony Gold ( HMY) was off 6%, and Gold Fields ( GFI) was down 2%.